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Conquering the German Market in Six Months

Healthcare Industry
Information is power. Let me start with some fast facts about Germany:
• 82 million people
• 3,300 private orthopaedic practices
• 36 university hospitals
• 1,200 hospitals with an orthopaedic and/or trauma department
• 80% of the hospitals are managed by purchasing groups

Germany has two types of health insurance: low-enforced (basic) public health insurance, which accounts for about 85% of the population, and private health insurance, which is used by the other 15%. Germany spent approximately 11.6% ($376 billion) of GDP on healthcare in 2012, ranking it fourth among Organization for Economic Co-operation and Development countries.

German health insurance companies have made substantial gains in the last two years and hold about $20 billion in cash. However, some health insurance companies are hostile to innovation and relentlessly request evidence-based medicine for reimbursement.

The German healthcare system operates on a Diagnostic Related Group (DRG) reimbursement system. If a surgical procedure is considered in the DRG system, the hospital will get a fixed lump sum as reimbursement for the total procedure. All medical devices, implants, disposables, drugs and fees are included in the DRG. History has shown that if a hospital starts buying less expensive goods, the DRG system will react about two years later by reducing the lump sum and reimbursement. The German DRG system is a self-learning system and detects economic changes, especially purchase prices for medical devices. The DRG system could decide to increase the reimbursement, but this never happens. It is an important milestone whether you get your own reimbursement for your device or form a strategy appropriate for the system. For example, it might be that your product fits into the existing DRG system and is listed as knee prosthesis. Welcome to the price battle. Real innovations and medical devices that bring new therapies or treatments can be offered to the potential market. If it is not reimbursed, meaning not listed, your potential customers most likely will not be interested in the product. The best strategy is to seek CE approval and apply for reimbursement at the same time. Approval and clarification of reimbursement is essential and key for selling high-tech and intellectual property successfully. It plays a major role in whether your business will be profitable or will flop.

The German medical device market enables rapid admission to the market through CE Marking. Orthopaedic device manufacturers will meet well-educated physicians and engineers, and find a high level of clinical research.

How can a manufacturer conquer the German medical device market in six months with a small budget? There are three options: 1) Use a distributor; 2) Sell direct or 3) Forget it.

No distributor is acting nationwide, yet. But there will be a nationwide medical device distributor soon. They have learned from the past not to act as a stocking distributor right from the beginning. Distributors are acting mostly locally, whether with agents or sales representatives. Sales staff mostly focus on the products that are easier to sell. Both distributors and agents will expect a binding and exclusive contract from manufacturers.